Determinants influencing the quality of auditing accounting estimates: empirical evidence of VietNam

This study was conducted to identify and evaluate the impact of determinants on the quality of auditing accounting estimates of auditing firms in Vietnam. Data were collected from questionnaires sent to 217 subjects, including auditors; audit assistants; and audit managers of 27 auditing firms in Hanoi and Ho Chi Minh City.
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Determinants influencing the quality of auditing accounting estimates: empirical evidence of VietNam The International Conference on Economics – ICE 2024 Hung Vuong University of Ho Chi Minh City, Vietnam March 18th, 2024 DETERMINANTS INFLUENCING THE QUALITY OF AUDITING ACCOUNTING ESTIMATES: EMPIRICAL EVIDENCE OF VIETNAM Pham Huy HungAbstract This study was conducted to identify and evaluate the impact of determinants on the qualityof auditing accounting estimates of auditing firms in Vietnam. Data were collected fromquestionnaires sent to 217 subjects, including auditors; audit assistants; and audit managers of 27auditing firms in Hanoi and Ho Chi Minh City. By quantitative research method, the resultsindicate that there are 3 main determinants that affect the quality of auditing accounting estimatesin descending order, including Auditors professional skepticism; The effectiveness of internalcontrol related to accounting estimates; Macroeconomic environment. Based on the researchresults, a number of recommendations are made to stakeholders to increase the quality of auditingaccounting estimates. The results of the study may also be useful for developing countries, wheresocio-economic conditions and the development of the audit profession are similar to those ofVietnam in terms of improving the quality of independent audit activities in general and the qualityof auditing accounting estimates in particular.Keywords: Auditing quality, accounting estimates, Vietnam.1 INTRODUCTION Over the past 30 years, Vietnams independent auditing industry has continuously grown,developed and affirmed its position and role in the development of the economy and the expansionof international integration of the country. Independent auditing activities have been graduallypublicized and transparent economic and financial information of firms and economicorganizations, contributing to detecting and preventing violations of the law, healthy investmentenvironment and promoting the development of capital markets. In addition to the achievements,independent audit activities also encounter many difficulties and challenges in performing theirfunctions and tasks. The highest responsibility for the preparation and presentation of true and fair financialstatements lies first and foremost with the managers of the enterprise. Meanwhile, to attract moreinvestment capital, to borrow capital more easily, to be able to win bids to make more largecontracts... the business itself tends to provide more beautiful financial information, with higherprofitability indicators, more total assets and reduced liabilities... In order to obtain good financialstatements, firms can use many accounting tricks, along with the dissemination of financialinformation that one of the quite useful tools often used by firms is to use accounting estimates. Accounting estimates are a fairly sensitive indicator in the financial statements, accountingestimates cannot measure value accurately, it depends much on the subjective judgment of the 1519 The International Conference on Economics – ICE 2024 Hung Vuong University of Ho Chi Minh City, Vietnam March 18th, 2024estimator (Lau, 2021). Meanwhile, it is the responsibility of auditors and auditing firms to collectsufficient appropriate audit evidence of accounting estimates that have been recorded or disclosedin the financial statements as a basis for expressing opinions for reasonable assurance that theaudited financial statements no longer contain material misstatements, including misstatementsrelated to accounting estimates. However, in relation to accounting estimates i.e. in relation to future uncertainties. To haveconvincing evidence of future events is not easy to do (Griffith et al., 2015; Christensen et al.,2012). On the other hand, to collect audit evidence for the conclusion on the reasonableness offuture results is also unlikely to be achievable (Bratten et al., 2013; Beatty & Webber, 2006).Therefore, auditing accounting estimates at the time of closing the accounting books is not easy toimplement and is considered one of the challenging issues in both auditing theory and practice(Tran & Nguyen, 2015). Low audit quality of accounting estimates can have serious consequencesfor stakeholders. It can result in misleading financial statements, misguiding investors and lendersin their decision-making (Pinello et al., 2020). Additionally, inaccurate estimates can lead toincreased financial risk for stakeholders, potentially resulting in financial losses or negativeimpacts on their own financial position. Moreover, low audit quality can erode investor confidence,decreasing market value and hindering capital raising. Regulatory and legal implications mayarise, with fines, penalties, legal actions, and reputational damage for the company andmanagement (Chung et al., 2021). Ultimately, inaccurate estimates can adversely impact theeconomy by undermining market stability, investor confidence, and overall economic growth(Glendening et al., 2019). This has attracted the attention and attention of academics and practicalactivists. So far, theres been a lot of research done by scholars around the world on this issue. Theresearch is mainly done by qualitative method to find difficulties for auditors when auditingaccounting estimates, such as Johnstone et al., (2001), Earley (2002), Kadous et al., (2003), Jenkins& Haynes (2003), Griffith et al., (2011). Research on the approach as well as the level of awarenessand compliance of the ...